It is not easy to trade options in Latvia, so I will describe the process how to get started and what to expect in terms of costs.
Swedbank – avoid if possible, high fees, no platform
At first you need to fill out a questionnaire about complex financial instruments and if you don’t fail, you will be allowed to sign an agreement. I signed it more than a year ago, but have not traded any options yet.
Why? Because there is no online platform – I have to call a broker to do any trades. And to make things even more complicated, the US stock market is open from 16:30 till 23:00 Riga time, and Swedbank brokers work till 17:00, so there is 30 min. time slot where I can check option prices, call the broker and provide instructions about the order.
Talking about fees – Swedbank charges 15 USD for each contract so it is very expensive to buy low cost contracts. For example – if I would want to buy 10 long-term, out of money contracts each for $100, then I would pay $1000 for contracts, and 10*$15=$150 in commission, and later when I sell these contracts, I would pay another $150. In short – I would need to get a gain of at least 30% to just get even in this trade.
DNB – need to wait, options not available yet
DNB has a trading platform called Trade DNB where you can trade Stocks, Forex, CFDs, Futures, but unfortunately no options. They said to be actively working on adding options as well, but could not provide any estimate.
Citadele – has online platform, fees could be lower
Have not tried their platform, but at least they have got one. And when compared to Swedbank, fees are cheaper as well – $15 for each trade + $2.5 per contract (min fee: $25), and on top of that – $45 per month for their online trading platform.
If I would buy 10 contracts each for $100, then my costs would be $1000 for contracts, and $15+10*2.5=$40 in fees, or $80 in fees when I later sell the contracts. If I would create 1 buy & 1 sell order per month, and also include monthly fee, total costs would be $125. In Swedbank’s case it would be $300, so at Citadele it is more than 2x cheaper and you also get an online platform.
Norvik – lowest fees
Small bank owned by a Russian guy. Not a big fan of this fact, but will try out their trading platform as they have the lowest fees – $2.5 per contract (min fee: $20) and $10 per month for their Norvik TWS trading platform.
Using the same example: 10 contracts for $100 each would cost me $25 per trade, or $50 if I also sell them, and together with monthly fee: $60. Again – 2x cheaper than Citadele or 5x cheaper than Swedbank.
To get started, visit one of their branches to open a bank account – without it you will not be able to open a trading account later. I chose the Maestro card – almost useless, but at least I get access to internet bank and commissions are low.
Note that you will need to pay 2 EUR in cash for opening the account – seemed stupid that I needed to visit an ATM because Norvik won’t accept my credit card or later take the money from my Norvik bank account, but that is their process.
Then you will need to fill out couple of documents mentioned here – send them to firstname.lastname@example.org or call 67011561 if you have any questions. They will also ask for a scanned passport and a bill that proves you live in address you mentioned – email those as well, sign an agreement and that’s it.
I have done all of the steps and expect to sign the agreement this week and will later probably share my first experience with trading options.
|Fees||Min fee per trade||Monthly fee|
|Swedbank||$15 per contract||$15||0|
|Citadele||$15 + $2.50 per contract||$25||$45|
|Norvik||$2.5 per contract||$20||$10*|
* – if no deals during the month – $10, for clients who generate at least $100 commissions per month – free of charge
Update @ 21.11.2016
Stay away from banks, use Interactive Brokers for lowest fees: “How to avoid high fees when investing in stocks?“